2019 (2) TMI 321 - HC - Income Tax

Estimation of cost of kernels - AO estimated it at ₹ 14/- per pound adding the value of the container - assessee s specific case is that the value of the container was included in the cost per pound of the kernels - percentage of dry-age claimed by the assessee @ 10%, while AO allowed it only at 5% - Held that - The assessee s specific case that the value of the container was included in the cost per pound of the kernels was accepted by the Tribunal, which is challenged by the revenue. As to the percentage of dry-age claimed by the assessee Tribunal found that there was absolutely no material to so reduce the dry-age as claimed by the assessee. The Tribunal looked at the quantitative assessments for the earlier years and found it to be varying between 7.5% and 10%. In such circumstances, the Tribunal directed allowance of the dry-age to be granted at 7.5%. Unaccounted sales estimation the same was on the basis of the purchases made and the sales revealed in the accounts. The Tribunal computed it on the basis of bags of goods, as admitted by the assessee, an apt exercise at the hands of the last fact finding authority. In computation, in fact, the Tribunal allowed only 5% dry-age. The Tribunal found the total unaccounted sales coming to only a value of ₹ 7,38,400/-. The additional ground was allowed to that extent reducing it to what was found by the Tribunal. No substantial question of law.

Summary

Issues:
1. Discrepancy in cost estimation of cashew kernels by the Assessing Officer and the assessee.
2. Disagreement over the percentage of dry-age claimed by the assessee.
3. Additional ground raised by the assessee regarding unaccounted sales estimation.
4. Evaluation of the Tribunal's decision and the reference made by the Tribunal against the revenue.

Analysis:
1. The first issue in the judgment revolves around the disagreement between the Assessing Officer and the assessee regarding the cost estimation of cashew kernels. The Tribunal accepted the assessee's claim that the cost per pound of kernels included the value of the container, contrary to the Assessing Officer's estimation. The Tribunal's decision was challenged by the revenue.

2. The second issue concerns the percentage of dry-age claimed by the assessee, which was contested by the Assessing Officer. The Tribunal, after reviewing quantitative assessments from previous years, found no substantial basis to reduce the dry-age as claimed by the assessee. Ultimately, the Tribunal directed the allowance of dry-age to be granted at 7.5%.

3. The third issue involves an additional ground raised by the assessee regarding unaccounted sales estimation. The Tribunal computed the unaccounted sales based on the purchases made and the sales revealed in the accounts, resulting in a reduced value of unaccounted sales compared to the initial estimation.

4. The final aspect of the judgment addresses the evaluation of the Tribunal's decision and the reference made against the revenue. Despite the reference being initiated by the Court, it was concluded that the questions raised by the Tribunal did not involve any legal issues, and the factual adjudication by the Tribunal was deemed acceptable. Consequently, the reference made by the Tribunal against the revenue was answered in favor of the Tribunal, and the matter was disposed of accordingly.